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HusterLaw.com Tom Huster Attorney at Law
Taxation Law
Estate Taxes
 
Overview of 2011 and 2012 Federal Estate Tax Laws
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act was signed into law by President Obama on December 17, 2010. This new law provides sweeping changes to the rules governing federal estate taxes, gift taxes and generation-skipping transfer taxes for the 2010, 2011 and 2012 tax years.

Here is a summary of what the new law provides for the estates of decedents who die in 2011 or 2012:
1. Sets new and unified estate tax, gift tax and generation-skipping transfer tax exemptions and rates. For 2011 and 2012, the federal estate tax exemption will be $5 million and the estate tax rate for estates valued over this amount will be 35%. The estate tax has also become unified with federal gift and generation-skipping transfer taxes such that the gift tax exemption and generation-skipping transfer tax exemption will be $5 million each and the tax rate for both of these taxes will also be 35%.
2. Offers "portability" of the federal estate tax exemption between married couples. In 2009 and prior years, married couples could pass on two times the federal estate tax exemption by including "AB Trusts" in their estate plan. The new law eliminates the need for AB Trust planning for federal estate taxes by allowing married couples to add any unused portion of the estate tax exemption of the first spouse to die to the surviving spouse's estate tax exemption. This will effectively allow married couples to pass $10 million on to their heirs free from estate taxes with absolutely no planning at all. Note that portability was not applied retroactively to January 1, 2010, and as it now stands is only available for deaths that occur during the 2011 and 2012 tax years. Hopefully this provision will be included in future updates of the Federal Estate Tax.

The Federal Gift Tax also provides for a $5,000,000 exemption for the next two years. Hopefully, this too will be extended. And, the old annual exclusion of $13,000 per donee remains in effect.


Overview of California Inheritance Tax
There is no California Inheritance Tax
 
 
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